NatWest gave up its marathon fight to retain independence yesterday, advising its bruised shareholders to back Royal Bank of Scotland's £21bn bid. After one of the hardest fought and closest run three-way contests ever staged in the City, Royal Bank will be the eighth largest bank in Europe and, at home, bigger than Barclays.

While the NatWest brand will be retained on the high street, it is unclear what name the combined entity will take on the stock market. It ends NatWest's 342 years of independence.

The process of combining the two banks will cost 18,000 jobs - a fifth of their combined workforce - and require Sir George Mathewson, the chief executive of Royal Bank, to prevent culture clashes between the two staffs.

Finance union, Unifi, called for a meeting with the Royal Bank, which refused to comment on where jobs will be shed last night other than to say it had a"clear plan for appointments on the basis of merit".

Royal Bank said it was still working hard to canvass support from shareholders yesterday in the final hours before the battle draws to its offical close on St Valentine's Day. Sir George will not be able to claim an emphatic victory until Monday, by which time all the votes from shareholders will be counted, although it is expected he will surpass the crucial 50% with ease after a roller-coaster week.

He also faces a two-week wait before his own shareholders ratify the deal, a gap which could leave the door open for a possible takeover bid against the Royal Bank itself, some corporate finance experts believe.

Bid speculation about Bank of Scotland, which on Thursday gave up the battle it initiated, subsided as Peter Burt, its chief executive, admitted to feeling disappointed at losing out in the four-month saga.

"We will carry on. We saw NatWest as a huge opportunity. We don't need NatWest. We never needed NatWest. It was an opportunity pure and simple that we're very sorry we lost - but too bad," he said.

BoS shares fell nearly 10% to 614p while Royal Bank's continued their slide, ending at 871p and reducing its offer for NatWest to around £12.50, above the target's £11.73 close last night.

While Mr Burt said he had no intention of resigning after losing the contest, NatWest's Sir David Rowland, the defeated chairman and chief executive, and Ron Sandler, the chief operating officer, will not take on new roles in Royal Bank.

Richard Delbridge, the NatWest finance director, is also expected to leave although it was unclear where Gordon Pell, lured from Lloyds TSB only 11 days, ago would be offered, or take on, another role.

Mr Sandler, speaking from his south London home, said his role now was to ensure a "smooth process" in the handover to Royal Bank. He and Sir David will meet with their counterparts at Royal Bank on Monday to hammer out the way forward.

NatWest finally admitted defeat to the stock exchange just after 9am yesterday morning, prompting a statement from Royal Bank in which chairman Viscount Younger said: "Together we will build the pre-eminent UK financial institution to the benefit of staff, customers and shareholders".

The takeover by Royal Bank - which is almost half the size of NatWest - was clouded by comments by Sir Brian Pitman, chairman of Lloyds TSB, who is credited with executing successful takeovers.

"It will be very interesting to see how they manage to deliver," Sir Brian said.